Market Roundup
- France Feb 2019 consumer confidence increase to 95 balance (fcast 92 balance) vs prev 92 balance (revised from 91 balance)
- Germany mar 2019 GFK consumer sentiment stays flat at 10.8 balance (fcast 10.8 balance) vs prev 10.8 balance
- Brexit: UK Labour's McDonnell says anything could happen at the moment, there is a majority in parliament for blocking no deal
- Brexit: UK Labour's McDonnell says this decision will be difficult for some lawmakers in the party
- Brexit: UK Labour's McDonnell says only way left now is to go back to the people
- BOE's Carney says as my colleague Gertjan Vlieghe has noted, that does not necessarily mean that, in the event of a no deal no transition scenario, either direction of policy is equally likely
- BOE's Carney says given exceptional circumstances of Brexit, I would expect MPC to provide whatever monetary support it can consistent with the price stability remit
- BOE's Carney says there are clearly limits to MPC's ability to provide monetary support
- BOE's Carney says in no-deal Brexit scenarios, MPC’s tolerance for sustained overshoot of inflation target could be breached and some tightening required
Economic Data Ahead
- (0830 ET/1330 GMT) The U.S. Department of Commerce is expected to report that housing starts decreased to an annualized rate of 1.253 million units in December from 1.256 million units in November.
- (0830 ET/1330 GMT) The U.S. building permits are likely to have decreased to a 1.290 million-unit pace in December from a 1.322 million-unit pace in November.
- (0900 ET/1400 GMT) The S&P/Case-Shiller reports the U.S. home price index of 20 metropolitan areas rose at an annualized rate of 4.5 percent in December after posting a gain of 4.7 percent in the previous month.
- (0900 ET/1400 GMT) The Federal Housing Finance Agency releases its housing price index for the month of December. The index gained 0.4 percent in November.
- (0900 ET/1400 GMT) Mexico retail sales are expected to have decreased 2.9 percent in December, from a year earlier.
- (1000 ET/1500 GMT) The U.S. Conference Board is likely to show its consumer confidence index rose to 124.7 in February from a reading of 120.2 in January.
- (1000 ET/1500 GMT) Federal Reserve Bank of Richmond will publish its Manufacturing Index for February. The index posted a decline of 2 in the prior month.
- (1630 ET/2130 GMT) API reports its weekly crude oil stock.
Key Events Ahead
- (0830 ET/1330 GMT) Philadelphia Fed issues Nonmanufacturing Business Outlook Survey for February in Philadelphia
- (0930 ET/1430 GMT) ECB’s Yves Mersch speaks at a conference in Brussels
- (1000 ET/1500 GMT) Federal Reserve Chairman Jerome Powell is scheduled to testify on the state of the economy before the Senate Banking Committee in Washington, presenting the semi-annual monetary policy report to Congress.
FX Beat
DXY: The dollar index plunged to a near 3-week low as investors remained cautious ahead of the testimony from Fed Chairman Jerome Powell that could provide fresh clues on the central bank's monetary outlook. The greenback against a basket of currencies trades 0.1 percent down at 96.34, having touched a low of 96.25, its lowest since February 6. FxWirePro's Hourly Dollar Strength Index stood at -22.42 (Neutral) by 1100 GMT
EUR/USD: The euro rallied to a 3-week peak, after Irish central bank chief and European Central Bank board seat candidate Philip Lane stated that Europe's recent slowdown implies only limited cuts in ECB's forecasts, and the current policy strategy should be able to handle it. Moreover, data showing French consumer confidence jumped in February to its highest level since yellow vest protesters started their weekly demonstrations supported upside. The European currency traded 0.5 percent up at 1.1361, having touched a high of 1.1371, its highest since Feb. 6. FxWirePro's Hourly Euro Strength Index stood at 14.01 (Neutral) by 1100 GMT. Immediate resistance is located at 1.1394 (Jan. 23 High), a break above targets 1.1417 (Jan. 25 High). On the downside, support is seen at 1.1318 (10-DMA), a break below could drag it till 1.1289 (Feb. 18 Low).
USD/JPY: The dollar eased from a 2-month peak touched in the previous session after a survey indicated that the U.S. house prices are forecast to rise this year at the slowest pace in more than half a decade. Moreover, expectations the Fed will not raise interest rates at all in 2019 intensified the selling pressure around the dollar. The major was trading 0.2 percent down at 110.86, having hit a high of 111.23 on Monday, its highest since December 27. FxWirePro's Hourly Yen Strength Index stood at -95.47 (Slightly Bearish) by 1000 GMT. Investors’ will continue to track the broad-based market sentiment, ahead of U.S. housing start, building permits, housing price index, consumer confidence and Fed Chair Powel's testimony. Immediate resistance is located at 111.19 (Dec. 24 Low), a break above targets 111.40 (Dec. 26 Low). On the downside, support is seen at 110.25 (Feb.15 Low), a break below could take it lower at 109.60 (Feb. 7 Low).
GBP/USD: Sterling rallied to a 4-1/2 month peak, above the 1.3200 handle after Bank of England Governor Mark Carney said that he expected the British central bank would provide more support for the economy in the event of a no-deal Brexit. Moreover, reports Prime Minister Theresa May would rule out a no-deal Brexit and delay Britain's exit from the European Union boosted the bid tone behind the British pound. The major traded 0.7 percent up at 1.3187, having hit a high of 1.3238 earlier; it’s highest since October 12. FxWirePro's Hourly Sterling Strength Index stood at 153.34 (Highly Bullish) 1000 GMT. Immediate resistance is located at 1.3257 (October 12 High), a break above could take it near 1.3276 (September 21 High). On the downside, support is seen at 1.3050 (February 25 Low), a break below targets 1.2991 (21-DMA). Against the euro, the pound was trading 0.8 percent up at 86.05 pence, having hit a high of 85.88, it’s highest since May 2017.
USD/CHF: The Swiss franc consolidated within narrow ranges, as investors cautiously waited to see if Washington and Beijing can secure a trade deal. The major trades flat at 1.0007, having touched a low of 0.9981 on Wednesday; it’s lowest since February 11. FxWirePro's Hourly Swiss Franc Strength Index stood at -152.28 (Highly Bearish) by 1100 GMT. On the higher side, near-term resistance is around 1.0054 (February 18 High) and any break above will take the pair to next level till 1.0111 (November 12 High). The near-term support is around 0.9961 (January 22 Low), and any close below that level will drag it till 0.9889 (December 7 Low).
Equities Recap
European shares slumped, weighed down by losses in tech, auto and miners stocks, while sterling rallied after BoE's Carney stated that the central bank is likely to help the economy after no-deal Brexit.
The pan-European STOXX 600 index plunged 0.2 percent at 371.40 points, while the FTSEurofirst 300 index slumped 0.2 percent to 1,459.86 points.
Britain's FTSE 100 trades 1.3 percent down at 7,094.27 points, while mid-cap FTSE 250 rose 0.1 to 19,269.22 points.
Germany's DAX declined 0.1 percent at 11,492.78 points; France's CAC 40 trades 0.3 percent lower at 5,217.52 points
Commodities Recap
Crude oil rebounded from a near 2-week low, as Saudi Arabia and the rest of OPEC were expected to stick to their policy of cutting production, despite renewed pressure from U.S. President Donald Trump. International benchmark Brent crude was trading 0.6 percent up at $65.14 per barrel by 1045 GMT, having hit a high of $67.70 on Friday, its highest since November 19. U.S. West Texas Intermediate was trading 0.3 percent higher at $55.53 a barrel, after rising as high as $57.79 on Friday, its highest since the November 16.
Gold prices declined, extending previous session losses, as risk-sentiment improved across the board. Spot gold eased 0.1 percent to $1,325.93 per ounce at 1050 GMT, having touched a high of $1,346.61 per ounce on Wednesday, its highest level since April 20. U.S. gold futures were steady at $1,330 as the dollar remained subdued.
Treasuries Recap
The U.S. Treasuries rose during late European session as investors wait to watch Federal Reserve Chairman Jerome Powell’s scheduled testimony on the economic outlook and recent monetary policy actions before the Joint Economic Committee, in Washington DC, today at 15:00GMT, besides, the 7-year Note auction, due today by 18:00GMT. The yield on the benchmark 10-year Treasury yield slipped nearly 1-1/2 basis points to 2.661 percent, the super-long 30-year bond yields traded tad lower at 3.030 percent and the yield on the short-term 2-year remained 1 basis point down at 2.496 percent.
The German bunds remained flat during European session ahead of the country’s 10-year auction, scheduled to be held on February 27 by 10:40GMT. The German 10-year bond yields, which move inversely to its price, remained tad lower at 0.103 percent, the yield on 30-year note hovered around 0.735 percent and the yield on short-term 2-year too traded flat at -0.563 percent.
The Japanese government bonds remained tad lower at the end of Asian session, as investors remained side-lined in a muted trading session that witnessed data of little economic significance amid growing hopes of a positive U.S.-China trade deal shortly. The yield on the benchmark 10-year JGB note, which moves inversely to its price, slumped nearly 3 basis points to -0.027 percent, the yield on the long-term 30-year jumped 1-1/2 basis points to 0.596 percent and the yield on short-term 2-year plunged 16-1/2 basis points to -0.164 percent.
The Australian government bond yields gained during Asian trading session tracking a similar movement in the United States counterpart as optimism continued to grow on hopes of U.S.-China trade agreement, after President Donald Trump stated an extension of the March 1 deadline, in lieu of the ongoing progress and a better trade deal. The yield on Australia’s benchmark 10-year note, which moves inversely to its price, rose 1-1/2 basis points to 2.092 percent, the yield on the long-term 30-year bond edged 1 basis point higher to 2.644 percent and the yield on short-term 2-year traded tad higher at 1.737 percent.
